Two Analysts Move Apple With Price Target Changes

Apple AAPL shares popped higher Wednesday morning after two analysts boosted price targets.

Barclays: Target Raised From $590 to $655, Maintains Equalweight

Analyst Ben Reitzes writes, “While we still have long-term margin concerns, the momentum trade is hard not to acknowledge at this point. Apple has avoided the widely expected first half slump in earnings and finally seems poised to announce a few new categories.”

Reitzes thinks overseas iPhone sales, the possibility of an iWatch and new services are encouraging, but “The key long-term question remains whether Apple can monetize its iTunes and App Store base further through offering payments services and other compelling web services. We believe the company will enhance its services offerings this year, but it will be hard to create meaningful recurring revenue that expands its multiple beyond the mid to low teens.”

Barclays’ $655 price target is based on elevated 2015 and 2016 growth; 11 percent and five percent year over year sales growth.

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Bernstein: Target From $615 to $700, Maintains Outperform

Toni Sacconaghi of Bernstein noted several catalysts to justify an elevated price target on Apple. These include a larger iPhone screen to attract Android users at a higher price, stabilized gross margins and US consumers in a better position to upgrade phones due to changes by mobile carriers.

Another point Sacconaghi made concerned the benefit from a split. Reasons the split may be accretive include greater interest from retail traders and heightened liquidity, encouraging funds to take bigger stakes and traders to be more active in the stock.